E-rupee is a digital form of the Indian rupee, introduced by the Reserve Bank of India (RBI). It aims to revolutionise the way transactions are conducted in India, making them faster, more secure and convenient. E-rupee was launched to promote digital payments and reduce dependence on physical currency. To use e-rupee, you need a digital payment system that supports it. This can be a mobile wallet app or a payment gateway integrated into your website or app. Let’s understand e-rupee in detail.

What is E-rupee?

Simply put, the retail e-rupee – or the Central Bank Digital Currency-retail (CBDC-R) – is a digital version of cash. It is legal tender issued by the Central Bank but in electronic form. The e-rupee is issued in the same denominations as currently available banknotes and coins. You can use the digital rupee for transactions via a digital wallet or UPI. 

E-rupee works as a prepaid voucher sent to the beneficiary’s mobile phone as an SMS or a QR code. The beneficiary can redeem the voucher at any merchant that accepts UPI e-prepaid vouchers without using a card, a digital payment app or Internet banking. The voucher is authorised by a verification code shared by the beneficiary.

Why was the E-rupee Introduced?

The RBI, in its concept document, mentioned a few principal motivations for introducing the digital rupee – 

  • Reducing the cost associated with physical cash management (printing, storage, transportation, etc.). 
  • Increasing the adoption of digital payments.
  • Supporting financial inclusion (especially via the ‘Offline’ feature in remote parts of the country with poor connectivity).  
  • Providing Indians with a safe digital currency without any of the risks associated with cryptocurrency. 

Who can Use E-rupee?

Digital e-rupee is especially useful for government agencies and regulatory bodies, as it enables them to provide welfare benefits and subsidies to the intended beneficiaries transparently and efficiently. e-RUPI also ensures that the funds are used for the specific purpose or activity for which they are issued, thus preventing leakage and corruption. 

You can also use e-RUPI for personal or business transactions, such as buying goods and services, paying bills, or booking tickets.

How is E-rupee Different from UPI?

One of the motivations behind launching a digital currency is to reduce settlement risk in the system. In the case of UPI transactions, the transfer of money involves a settlement process, where you place a request with your bank, and the funds are then deducted from your account and transferred to the beneficiary’s account. 

But with e-rupee transfers, there is no intermediary. It is the electronic equivalent of handing cash over to another person. The money is never ‘in transit’, nor is there any need for inter-bank settlement. 

The e-rupees are simply transferred from one wallet to another, and the funds become the property of the receiving party; this is the concept of ‘settlement finality’. 

What Does E-rupee Mean for Users?

With the digital rupee, we could be looking at a whole new era of convenience in digital payments. Transferring funds will be the literal equivalent of handing cash over, totally instantaneous. The RBI has even mentioned an ‘Offline’ feature, allowing transactions to occur even without a mobile network. This is especially beneficial for remote areas, where the penetration of digital payments has suffered. 

A digital currency would reduce the dependence on cash and reduce fraud in digital transactions. The government could use the e-rupee to improve the mechanism of directly transferring funds to beneficiaries of schemes. 

One feature of physical cash transactions is anonymity: there is no digital trail. While the idea of anonymity while transacting in digital rupees may sound infeasible, The RBI has suggested that ‘reasonable anonymity for small value transactions’ could be a desirable option for CBDC-R. This means that you could potentially transfer funds without leaving any record. However, such anonymous transactions will likely be capped at a certain value. 

Another significant factor is that e-rupees will likely not bear any interest, with the RBI noting that physical cash does not carry any interest either. 

How Do We Start Using the E-rupee?

For now, the trial will only cover selected consumers and businesses in a closed user group, with only certain cities and banks involved. When the e-rupee is rolled out, you will be able to download an app from your bank and transact using digital rupees. For example, Yes Bank has launched its digital rupee app.

Benefits of E-rupee

The digital rupee has several benefits that make it a convenient and efficient option for both consumers and businesses.

Some of these benefits are:

  • E-rupee digital payments are fast and easy, as they do not require any intermediary or bank account. You can easily scan a QR code or input an SMS string to make or receive payments.
  • E-rupee transactions are cost-effective, as they do not involve any transaction fees or charges. You can save money by avoiding the fees that are usually levied by banks, payment gateways or other service providers.
  • E-rupee transactions are secure and private, as they do not expose any personal or financial information. You can maintain your anonymity and confidentiality while making payments.
  • E-rupee transactions are inclusive, as they can reach out to the unbanked and underbanked segments of the population. Users who do not have access to traditional banking services can use e-rupee to participate in the digital economy.

Related Read: What is a Payment Gateway and How Does it Work?

Which Banks Use E-rupee?

Some popular banks with e-rupee facilities are:

  • State Bank of India
  • HDFC Bank
  • Axis Bank
  • Punjab National Bank
  • Bank of Baroda
  • Canara Bank
  • IndusInd Bank
  • ICICI Bank

Future of E-rupee in India

The e-rupee could have a transformative effect, deepening and widening the reach of digital payments in India. It could herald a new era of ease and convenience in digital payments in the country’s farthest corners. It is important to note that the e-rupee is intended by the RBI to ‘complement’, rather than replace current forms of money.

In 3 years, will the e-rupee become as much a way of life for businesses and consumers as UPI? Let’s wait and find out!

Frequently Asked Questions (FAQs)

1. What is India’s e-rupee called? 

The digital Indian rupee is currently known as the e-rupee or e₹.

2. How to invest in e-rupee?    

The RBI rolled out a pilot (test) programme for the e-rupee in both the retail and wholesale segments, which is being expanded in FY2023-24. 

3. What is the value of the e-rupee?

The value of the e-rupee is the same as the Indian Rupee (INR). The e-rupee operates on a one-to-one basis, meaning that 1 e-rupee equals 1 INR.

4. How do I get the e-RUPI app?

You can download the e-RUPI app from the official app stores such as Google Play Store or Apple App Store. Once you have downloaded the app, you must register using your mobile number and complete the verification process. After successful registration, you can link your bank account to the app and use it for digital transactions.

5. What is the validity of the e-rupee?

The e-RUPI voucher’s duration will be determined by the Issuer Bank or Payer PSP based on the specific use case, with a maximum validity of one year per voucher.

6. What is the maximum amount of e-rupee in India?

The maximum amount allowed per e-rupee voucher cannot go over INR 1,00,000 unless the regulator sets a different limit.


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